23 Oct Is it time to raise your prices?
This topic has cropped up a few times with clients lately.
Are you thinking about raising your prices? What should you raise them to? What if no-one wants to pay the new price and you lose all of your customers?
Maybe you should just leave things as they are then.
Okay, you’re not making enough money and you’re working crazy hours – but your customers are really pleased!
Sound familiar at all?
Time to get real – are you running a community service or a business?
When should you raise your prices?
I’m assuming you’ve done your market research and know what your competitors are charging. I bet you didn’t want to charge any more than them when you were starting out as you felt you didn’t have the experience to justify it and, maybe, you undervalued what you sell as a way to try and get more customers.
How long is it since you reviewed your prices?
Here are 2 ‘red alerts’ that signal you need to raise the price.
- You are too busy and struggling to cope with customer demand. This may be part of your business strategy and you may be planning to build a business model to support this i.e. recruit staff, outsource etc. If not though, now is the time to review your prices. If you increase them now you could end up keeping the same customers and making more money that you can use to outsource some work and free up your time. If you lose some customers, you could still be making the same money overall from less customers, therefore needing less of your time. In other words earning more or the same amount of money in less time.
- You are not making a profit. If you are not making a profit with your current pricing then you need to go back to your business model and either increase sales, reduce your costs or increase your prices. Increasing your prices is the easiest one of these to do. You need to know that you can make a profit from your business otherwise it’s not really a sustainable business and it’s better to find this out sooner rather than later.
How do you raise your prices?
- Get clear on the value you give your customers. How are you helping them? What problems are you solving for them? What are you doing differently to your competitors? Why are you worth paying the increased price for?
- Communicate the change to your customers but never apologise for it. Your message should focus on the value they get from working with you.
- Never assume what your customers are and aren’t willing to pay for. If you want something bad enough you will find a way to pay for it, and your customers are the same. Your job is to make them want it bad enough! (go back to point 1 if you’re not sure)
- Be brave and do it!
Leave me a comment to add any more tips or let me know how you get on.
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